From the mailbag today:

I've been reading your prediction that Republicans will simply find a way to overturn any built-in cuts to defense spending. With Obama's veto threat, do you still see things the same way?

This is too hard to answer. The most obvious question, of course, is how resolute Obama will be. His past behavior certainly suggests a very strong preference for finding some kind of compromise position rather than digging in his heels, but then again, he doesn't usually make flat-out veto promises either. So maybe this time is different.

But I'm not sure it matters. Here's the only thing that's really important: the defense cuts don't kick in until 2013. In other words, not until after the 2012 election. And let's face it: all bets are off at that point. Maybe president Gingrich will be in charge then. Maybe Obama will win and cut a deal with the lame duck Congress, like he did last year. Maybe we'll be in the middle of a war with Ubeki-beki-beki-stan. Who knows? A year in politics is a long time to begin with, and a year plus a presidential election is like an eternity. Basically, after everyone has finished up wailing about the fecklessness of Congress and moved on to some other shiny new object — a process that should take no more than a week — the whole thing will be forgotten. When it's suddenly thrust back into the spotlight next December, we'll be living in a whole new world. Anything could happen.

Still, the smart money says that "anything" doesn't include very much in the way of cuts to the defense budget. There's just too much institutional and political pressure to keep money flowing to the Pentagon. No president in recent memory has stood up to it, and I doubt that Obama will be the first.

Shortly after I tweeted something rather impolite, though not inaccurate, about Mitt Romney's appallingly dishonest new anti-Obama ad, I received a direct tweet from ex-congressman and former Louisiana Gov. Buddy Roemer. The conservative Democrat turned Republican presidential candidate (although you'd hardly know it, given that Roemer was excluded from the GOP debates) wanted to point my attention to a couple of video clips showing Romney's er, evolving views on campaign-finance reform. 

The first one is pretty boilerplate: a young Senate candidate Romney taking swipes at Teddy Kennedy while calling big-money influence-peddling "wrong." But the second clip, wherein he tries to explain (or avoid explaining) to an old lady how it's okay that his PAC took $1 million from a shadowy shell company that was subsequently dissolved—well, it's just fun to watch Romney squirm. Have a look.

Here's Romney campaigning in Massachusetts in 1994:

And more recently, presumably in New England:

Oh, and if you're needing a laugh, here's a little holiday gift from ThinkProgress...

Undeterred by Mississippi's failed attempt to grant fertilized eggs the same rights as adult humans, anti-abortion rights advocates in Colorado and Virginia signaled Monday that intend to bring the effort to their states.

In Virginia, Delegate Bob Marshall (R) filed legislation that would amend the state constitution to declare that the "life of each human being begins at conception" and would grant all rights of Virginia citizenship to those "unborn children." Unlike Mississippi's measure, this bill specifically excludes "lawful assisted conception"—apparently embyros created for assisted reproduction aren't people. The proposal also states that there should be no action taken against a woman "for indirectly harming her unborn child by failing to properly care for herself or by failing to follow any particular program of prenatal care." The legislative language doesn't mention birth control, abortions to protect the life or health of the mother, or abortions in the case of rape or incest—all of which would likely be affected by this kind of law.

Colorado's attempt comes in the form of a ballot initiative from Personhood Colorado—the same group that led two previous failed ballot measures in the state, in 2008 and 2010. This time, they're making it clear that they are also going after birth control and assisted reproduction. The Denver Post reports:

The 2012 Personhood Amendment would add a new section to the state constitution to "affirm basic human dignity" and guarantee that the right to life "applies equally to all innocent persons" and "the intentional killing of any innocent person is prohibited."
"Our language is very clear this time," said Kristi Burton Brown, amendment co-author and Personhood Colorado founder. "No one can doubt our intentions or the effects this time."
The 2012 language states that only birth control, in-vitro fertilization and assisted reproduction "that kill a person" shall be affected by this amendment.
The term "person," the proposed amendment states, applies to "every human being regardless of the method of creation" and a human being is "a member of the species homo sapiens at any stage of development."

That's my name, don't wear it out!

Fox News has obtained a copy of Donald Trump's upcoming book, in which he addresses a touchy subject: His net worth. The real estate magnate turned reality TV star turned Birther presidential wanna-be has never been keen on disclosing his true wealth—probably because it's not as impressive as he'd like us to believe. In 2006, Trump sued a journalist who'd reported that he was only worth between $150 and $250 million; Trump claimed he was worth at least $2.7 billion.

Now, according to Trump's book, he's worth more than $7 billion. Of that, $3 billion is the value of the Trump brand, i.e., his name.

How do you get your name to be worth a purported $3 billion? First, you slap it onto every kind of product imaginable, from hotels to perfume to a vanity beer label. Here's a selection from the more than 200 trademark applications The Donald™ has filed in his own name:

The Donald

Trump Style

Trump Class

Trump Touch

Donald J. Trump, the Fragrance


Purely Trump

Trump Steaks

Oysters Trump

Trump's Golden Lager

Trump's American Pale Ale

Trump Vodka

Trump Ice


Trump Card

Trump Furntiture

Trump Home

Trump Office

Trump World

Trump Money

Trump Mortgage

The Donald J. Trump Credit Card

The Donald J. Trump Signature Collection

The Trump Art Collection

Trump Concierge Service

Trump D'Elegance

Trump Attaché

Trump Versailles

Trump Royale

Tour de Trump

Trump Super Speedway

Trump's World's Fair

The Trump World Open

Trump University

Trump Institute

Trump Airlines

Trump Air

Trump the Game


Trump Tycoon

Trump Fire

Trump Power

Trump Icon

The Trump Follies

Source: US Patent and Trademark Office

As Washington comes to terms with the supercommittee's failure to extract another $1.2 trillion in savings from the federal budget, the conversation is quickly shifting back to measures that could actually juice the economy.

One of the more obvious ones is to extend unemployment benefits. Another is renewing the payroll tax cut President Obama signed into law last December, which reduced the employee share of the Social Security payroll tax from 6.2 to 4.2 percent. According to the Tax Policy Center, 121 million families benefited in 2011, at a cost of roughly $120 billion.

But the payroll tax cut expires on January 1. Views about what could happen if the payroll tax cut isn't extended vary, the Washington Post's Jia Lynn Yang reports. Goldman Sachs estimates that a failure to extend the payroll tax cut would stymie GDP growth by two-thirds of a percentage point in early 2012, while market research firm Macroeconomic Advisers thinks the slowdown would be closer to 0.5 percent.

But what does that mean for workers across the income spectrum? As Kevin Drum explained back in August:

Poor people, who are the most likely to spend the money, pay little or no payroll tax in the first place. And richer people, who are the most likely to save it, don't usually have any big debt problems. Most of the benefit of a payroll tax cut, therefore, is limited to a smallish segment of the public that's (a) rich enough to get a significant amount from a payroll tax holiday but (b) poor enough to either spend it all or use it to pay down debt.

But just how much more does it put in the pockets of poorer people? The Center on Budget and Policy Priorities chartified some answers:

Failing to extend the payroll tax holiday would take a bite out of the wages of workers at all income levels. But it's workers at the low end of the spectrum that would feel the pain most acutely.

Republicans—even those who've backed the payroll tax cut in the past—are lining up against it this time around, as Suzy Khimm wrote on Monday. That's because it's a signature piece of President Obama's jobs plan, and blockading his agenda is central to their efforts to take back the White House in 2012.

But given the fact that the payroll tax cut is a proven stimulative measure (even if it's not necessarily the most effective one, as Kevin pointed out), Obama isn't likely to abandon it, and Republicans know this. So expect them to use its extension as a bargaining chip/hostage in a future showdown—one over scaling back scheduled cuts to defense spending that will result from the supercommittee's failure to reach a deal.   

Via Matt Yglesias (writing from his new Moneybox home at Slate), I see that the Federal Reserve has, unsurprisingly, declined to adopt a policy of targeting nominal GDP growth:

A number of participants expressed concern that switching to a new policy framework could heighten uncertainty about future monetary policy, risk unmooring longer-term inflation expectations, or fail to address risks to financial stability. Several participants observed that the efficacy of nominal GDP targeting depended crucially on some strong assumptions, including the premise that the Committee could make a credible commitment to maintaining such a strategy over a long time horizon and that policymakers would continue adhering to that strategy even in the face of a significant increase in inflation.

Matt is unimpressed: "The claim that this would 'heighten uncertainty' seems to me to be just flat-out wrong." Of course it is. But that part of the statement is just window dressing anyway. The part that matters is in bold. Targeting higher NGDP levels would clearly involve tolerance for higher inflation, and there are lots of FOMC members who just aren't willing to go there, no matter how weak the economy is, how high unemployment is, or how big the risks from Europe are. Just as the Germans seem to be forever reliving the 20s, in the U.S. we are forever reliving the 70s. Inflation delenda est, baby.

On-and-off Republican front-runner Mitt Romney.

CBS News has obtained an interesting internal memo from the Romney presidential campaign:

With a primary strategy focused on winning New Hampshire, Republican presidential candidate Mitt Romney is set to pick up the endorsement...[of] Rep. Charlie Bass, but an internal campaign memo points [out] the potential downside of associating closely with the veteran congressman -- his lack of purity on tax increases.

"Note that as we're touting Charlie's fiscal bona fides, he was one of 40 House Republicans to sign off on the letter to the super committee a few weeks ago saying they are open to revenue increases," says the email from Jim Merrill, Romney's top New Hampshire strategist. "He says he means through eliminating loopholes or simplifying the tax code, but conservatives don't trust Charlie and are guessing this means he'll vote to raise taxes. No way to avoid it -- it's part of the Charlie package. I'm sure it'll come up."

The leaked memo illustrates how sensitive the Romney campaign is about big chunks of the conservative base thinking Romney is a closet liberal.

In the real world, the support of Rep. Bass, a starkly ordinary East Coast Republican, shouldn't be an actual problem for Romney. It's not like this guy's Jeremiah Wright, or anything; all he did was float the idea of possible revenue increases (much like another Republican you might recognize). This was, of course, after the New Hampshire representative's years of support for a balanced budget amendment, his vote in favor of the Ryan budget, and earning a 89-percent grade on free market principles from the Cato Institute.

Unfortunately, Romney is deep in the GOP's 2012 primary-election universe, a world in which an endorsement from a Republican with small tax hikes on the mind is anathema, but palling around with a tough-guy sheriff with white nationalist ties is somehow kosher.

This post has been edited for clarity.

The defense spending bill currently under consideration in the Senate would authorize the indefinite military detention of Americans suspected of terrorism, mandate indefinite military detention for non-citizens apprehended in the US, and make it almost impossible to transfer detainees in Afghanistan out of US custody. The Obama administration has already threatened to veto the legislation.

But the proposed law could still get worse: on Friday, a Republican senator proposed repealing Obama's ban on torture. 

Senator Kelly Ayotte (R-N.H.), who won her seat in the 2010 GOP wave, has spent much of her time in the Senate trying to militarize all counterterrorism operations and reinstitute Bush-era interrogation policies. Last week, backed by Senators Saxby Chambliss (R-Ga.) Lindsey Graham (R-S.C.) and John Cornyn (R-Texas), Ayotte proposed an amendment to the defense bill that would legalize torture.

The amendment, which purports to authorize "lawful interrogation methods," actually rescinds Obama's 2009 executive order banning torture. It directs the secretary of defense, attorney general and director of national intelligence to adopt a "classified annex" to the Army Field Manual, complete with a list of interrogation methods that could be used by the inter-agency High Value Interrogation Group (HIG). A coalition of civil liberties and human rights groups has called on the Senate to reject the amendment, stating it would "revive the use of torture and other cruelty in U.S. interrogations."

Both Paul Krugman and Tyler Cowen recommend a new paper from Hyun Song Shin called "Global Banking Glut and Loan Risk Premium." If both of those guys say a paper is important, then it's probably pretty important. So I took a look. I'll confess up front that I had a hard time plowing through it, which means my summary might be off base a bit here and there, but here we go anyway. Roughly speaking, Shin says the following things:

  • Credit expands when banks lever up their balance sheets by piling up lots of debt.
  • Thanks to Basel II, European banks levered up even more than U.S. banks.
  • Some of this was intra-European debt, but lots of it was U.S. debt denominated in dollars. In total, European banks had about $5 trillion in claims on U.S. counterparties in the peak year of 2007, much of it via purchase of private label subprime securitizations.
  • In other words, the European segment of the shadow banking system was indirectly providing about $5 trillion in credit to U.S. borrowers. This was about as much as U.S. banks provided directly.
  • The mechanism for this indirect flow was simple. Starting in 1999, U.S. money began flowing in large quantities to the U.S. subsidiaries of European banks, then across the Atlantic to their home offices in Europe, and from there back to borrowers in the U.S.
  • Conclusion: the European banking sector provides about as much credit to the U.S. as the American banking sector does. So when the European banking sector deleverages, as it must, it will have a very substantial effect on credit conditions in the U.S. In Shin's bland phrasing, "The European crisis carries the hallmarks of a classic 'twin crisis' that combines a banking crisis with an asset market decline that amplifies banking distress....The global flow of funds perspective suggests that the European crisis of 2011 and the associated deleveraging of the European global banks will have far reaching implications not only for the eurozone, but also for credit supply conditions in the United States and capital flows to the emerging economies."

Translated, this means that as sovereign debt woes get worse, bank woes get worse too. And as bank woes get worse, sovereign debt woes get worse. The result is a vicious circle that produces a big credit contraction, and since European banks have become so important as funding sources to the U.S., it means a big credit contraction in the U.S as well.

Tyler's comment: "If true we are doomed." On a separate note, Shin also points out that after the euro was introduced in 2000, cross-border claims within Europe skyrocketed. Unfortunately, banks themselves mostly stayed pretty local:

The introduction of the euro meant that “money” (i.e. bank liabilities) was free-flowing across borders in the eurozone, but the asset side remained stubbornly local and immobile. It is this contrast between the free-flowing liabilities but localized assets of European banks’ balance sheets that has been a key contributing factor in the European crisis.

In other words, wholesale funding flowed easily to wherever it would get the best return, but banks mostly kept their loan books local. This produced big property bubbles in Ireland and Spain and big current account imbalances across the entire continent. There's no easy way for this to unwind, and unfortunately, even the moderately difficult ways appear to be out of bounds to the eurozone's policymakers. If we really are doomed, it's partly because of bad policymaking during the aughts, but it's also because of disastrous policymaking right now. I wish I thought that Shin was wrong about this, but I suspect he's not.

Here we go again. Once more on the eve of a major United Nations negotiating session on climate change, an anonymous commenter has posted thousands of emails between scientists online. Climate change critics have already latched onto the emails as "Climategate 2.0." Much like the first iteration of the manufactured controversy, the commenter released the emails with a selection of short, out-of-context quotes designed to make scientists look nefarious.

The latest release includes 5,000 additional emails, and the poster claims to have another 220,000 on a private site that he or she does not intend to release. The poster again goes by the handle "FOIA," as was used when the first round of emails was released in November 2009.

Several of the scientists who wrote the emails have confirmed that the latest batch is legitimate. Officials at the University of East Anglia in the United Kingdom has already posted a statement, indicating that what they have read so far appear to be actual emails, and that they believe these are additional emails acquired at the same time as the initial theft.

Many are speculating that the release was intended to derail the upcoming climate talks in Durban, South Africa—which would be true, if anyone were paying attention to them in the first place. (I'll have more on Durban in a few days.) And as with the first round, a lot of what is portrayed as sinister plotting or subterfuge among scientists is really just how science works—people disagree, they criticize each other's work, and they sometimes aren't very nice. And, just like in the last round, some of them show scientists discussing how to avoid turning over their emails to skeptics that would use them to bash the science. I'm hoping the irony of that isn't lost on anyone.

Pennsylvania State University climate scientist Michael Mann, who has probably been the subject of more skeptic hatred than any of the other scientists involved in the emails, told me in an email that this latest round seems like a weak attempt to reignite controversy. "I guess they had very little left to work with, having culled in the first round the emails that could most easily be taken out of context to try to make me look bad," said Mann. "Just another shameless effort to manufacture a false controversy, once again, on the eve of a key international climate change summit."

I'd hesitate to call attention to a bunch of stolen, out-of-context emails at all, except for the fact that part of the reason that Climategate 1.0 was blown so far out of proportion is that most people ignored it for so long and let the denial crowd frame the conversation. By the time reasonable people caught up, it was already out of control. Journalists basically ran with the skeptic's talking points, and despite numerous investigations and exonerations, the incident remained a stalking horse for the global warming denial crowd. For a more detailed, and lengthy, examination, see my piece on the incident from April.